U.S. Importing Much Less Oil, but Still Spending a Lot on It

The U.S. is importing a lot less foreign oil. But it isn’t spending much less on it.

The surge in domestic oil production — combined with a slow but steady decline in consumption — has taken a big bite out of U.S. oil imports in recent years. The U.S. imported just under 10 million barrels a day of crude oil and related products in June, according to Energy Information Administration data, down from more than 12 million barrels per day in 2010. Exports, meanwhile, are up more than 50% over the past three years. Put the two together and we’re importing less oil on a net basis than at any point since the early 1990s.

But the oil boom’s impact has been much more muted in terms of the trade deficit, as economist James Hamilton recently noted. That’s because we measure the trade deficit in dollars — and the price of oil remains high. Oil prices have shot up in recent weeks, partly in response to the threat of worsening conflict in the Middle East. But even before the latest rise, prices had been hovering around $100 per barrel. Set aside 2008’s short-lived spike above $140 per barrel, and prices have been trending upward for more than a decade.

Rising prices mean the U.S. is spending more for the oil it imports, even as it imports less of it. The U.S. bought $31.3 billion on oil in July and sold $12.5 billion worth, for a deficit of $18.7 billion, the Commerce Department said Wednesday. That’s down 13% from a year ago, a significant decline, but far smaller than the 24% decline in net imports by volume.

The disparity is even clearer over a longer timeframe. In terms of barrels, U.S. is now importing about the same amount of oil as it was 20 years ago — net imports are actually down 7% since the start of 1993. But in dollar terms, the petroleum trade deficit has more than tripled over the same period, even after adjusting for inflation.

That doesn’t mean reduced oil imports are unimportant. If the U.S. still relied on foreign countries for 60% of its oil, as it did in the middle of the last decade, it would be importing 5 million barrels of oil more per day than it currently is — at a monthly cost of $15 billion.

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